A Brake On Profits

Japan’s carmakers are passengers in a wild currency ride. Their shares have crashed since Britain voted to quit the European Union. Fears about an economic slowdown and tariffs on UK-made cars play a role, but gyrations in foreign-exchange markets are mostly to blame. At the close on July 4, shares in Japan’s “Big Three” – Toyota, Nissan, and Honda – and smaller peers Mitsubishi, Suzuki and Fuji Heavy stood between 6 and 13 percent lower than on June 23, before Britain opted for Brexit. Mazda, the worst hit, has lost more than a fifth of its value. Those moves actually suggest investors are looking past short-term weakness. Goldman Sachs analysts, for example, have slashed current-year operating profit forecasts for Japanese car and truckmakers they assess by an average 18 percent.

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